FX Market Analysis – The Canadian Dollar $ December 2019

*Technical analysis of the Canadian Dollar FX currency against 2 cross currencies*

I am back! I spent the last week in New York taking a break and seeing the sights so I apologise for the lack of content but it was much needed. If you didn’t read last weeks blog post then click on the link below to learn about my Travel Hack!

https://diaryofafinancekid.com/2019/12/03/travel-hack-free-lounge-access/

Now, let’s get right back in to it with my live analysis of the Canadian Dollar currency and where I think it will go over the next few days and weeks. I am currently trading this currency across 2 FX currency pairs to spread my exposure a little bit more but across both pairs I am betting bullish on the CAD $.

As always, you can check my open positions and track them live via the TradingView platform. My CAD $ trade entries can be found by clicking on the links below.

https://uk.tradingview.com/chart/CADJPY/WgCcXsix-CADJPY-Long-Trade-DAILY-TREND-CONTINUATION/

https://uk.tradingview.com/chart/USDCAD/Rlj83xYO-USDCAD-Short-Trade/

Let’s look at the USDCAD currency pair first. If you are unsure about what the ticker means (USDCAD) then it means you are trading the US dollar vs the Canadian Dollar with USD being the base currency. Therefore, if I am bullish CAD $ I am going to be shorting this FX currency pair by selling USD and buying CAD. Another way of understand this is that if it was CADUSD then I would be looking to enter long positions if I was bullish CAD $ because I want to be buying the base currency this time.

USDCAD daily timeframe chart

The chart above is my higher timeframe analysis of the USDCAD FX currency pair and in my opinion, I believe this pair is definitely bearish. Price has made multiple waves over the past 4-5 months with lower highs made each time. There is strong resistance formed at 1.33200 on this most recent wave and I am now looking to trade this currency pair down to the daily support at 1.30500. These levels are shown on the chart above.

As I explained, being bearish (selling) on this FX currency pair is selling USD and buying CAD and that is why it works with my bullish view on CAD $.

Let’s look at the 4hr timeframe chart.

USDCAD 4 hour timeframe chart

This timeframe is the one I have used for entering both short positions on USDCAD. My first entry is up at 1.33120 and was entered around 2 weeks ago. My 2nd short position was entered today at 1.32620 for the following reasons.

  1. Price has broken the 4hr trendline and made a lower low last week. This confirms the 4hr trend is now bearish.
  2. Price broke the intraday support zone at 1.32600 (coloured zone on chart) and is now back there and retesting the zone as resistance from below. This is a good example of how support/resistance zones act as floors and ceilings.
  3. Price has rejected the 4hr 0.618 fibonacci retracement level.

I am now looking to short USDCAD down to new 4hr lower lows and eventually the daily support zone shown at the bottom of the chart.

If you haven’t read my previous blog post on support and resistance zones then I highly recommend you do. It contains a lot of information that is relevant to my trade entry positions and profit taking on the USDCAD trades shown above. Click on the links below to read them.

https://diaryofafinancekid.com/2019/04/04/the-power-of-support-and-resistance-zones/

https://diaryofafinancekid.com/2019/06/25/intraday-support-and-resistance-zones/

Now let’s look at my second FX currency pair that I am using to trade a bullish bias on the Canadian Dollar. This pair is CADJPY.

CADJPY daily timeframe chart

Much like USDCAD, I am primarily trading the daily higher timeframe trend but where price action looks nice and bullish. This is because CAD $ is now the base currency of this FX pair and therefore I am looking to go long and buy CAD and sell JPY.

There is a nice strong bullish trendline supporting price on the daily timeframe and price is continuing to bounce off this. I have also marked the chart with the higher highs and higher lows of the daily price waves which also supports a bullish trend bias.

My longer term profit target on this FX pair is around the 84.580 zone where price will have made a new daily higher high and this zone contains the -0.27 fibonacci extension level. This is a good tool to use for profit targets when trading established trends.

Let’s look at the 4hr timeframe chart and I will show you my current long positions on CADJPY.

CADJPY 4 hour timeframe chart

The 4hr timeframe chart shows 3 key points of analysis. The first is that the bearish counter trendline of the last price pullback in to the daily bullish trendline was broken and retested with a higher low. This is a sign of the daily bullish trend looking to continue again. The next point of analysis is that this retest of the trendline produced a higher low which we I could then use to draw a new lower timeframe bullish trendline for a more accurate scale in position. The 3rd point of analysis is that price then went on to make another 4hr higher high and pulled back to the bullish trendline where I have entered long again.

The chart above shows both my original daily long trade entry and the recent intraday long position which is a scale in entry.

Profit target 1 is set at the 4hr -0.27 fibonacci extension level where a new higher high should be made. I will take profits of my scale in position here to look in a good return and then look to trade my original long position up to the the long term profit target shown on the daily timeframe chart.

Price Predictions & Trading Opportunities:

I am bullish CAD $ and therefore so long as price continues to make higher highs and higher lows, I will be looking to buy in to the bullish trend on any significant pullbacks. I am not one to buy the highs/sell the lows so I only look to add long positions on dips in price.

There is no need to rush in to these trades. Looking at the higher timeframe chart, there is plenty of room to the upside for CADJPY and downside potential for the short positions on USDCAD. Therefore, I always advise to be patient, use your brain and enter positions with good reward:risk ratios and high probabilities of success.

Useful Links:

All my technical analysis is done using the TradingView platform. You can get access via the link below.

https://tradingview.go2cloud.org/SH3bP

My preferred broker of choice is IC Markets. Low spreads and trading costs really help long term profitability. A link to their site is below.

https://www.icmarkets.com/?camp=38537

Thanks for reading and please don’t forget to LIKE, SHARE and FOLLOW my blog to stay up to date with the latest market analysis and trading education posts.

DISCLAIMER: None of the information posted on this site is to be considered investment/financial advice. Trading is high risk and you should only trade with money you can afford to lose.

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